By Tom Bergin
LONDON May 25 A proposed pipeline that would
cut Europe's dependence on Russian gas by opening a route for
Central Asian and Middle Eastern supplies has been shelved
because it is not economically viable, anchor supplier BP
The UK oil major is no longer considering the Nabucco
pipeline as an option for shipping gas from its Shah Deniz Stage
2 Gas field in Azerbaijan, Iain Conn, BP's head of fuel refining
and marketing said in a speech circulated by BP on Friday.
Shah Deniz was supposed to be the anchor supplier for
Nabucco, shipping around 16 billion cubic metres per year
through the 4,000 kilometre pipeline - just over half the
planned total capacity of 30 bcm/year.
Project leader, Austrian oil group OMV, hoped to
fill it in coming years by signing up additional suppliers in
Turkmenistan, Iraq and possibly even Iran. But BP thought a
pipeline that would be half empty for an indeterminant period of
time would be economically unfeasible.
Brussels had lobbied European Union countries to support
Nabucco, which was estimated to cost over $12 billion, but in
the end, none was prepared to put up enough to pay for the spare
The European Commission refused to accept defeat on Friday,
saying that the full pipeline was under consideration, despite
As recently as last week, Managing Director Reinhard
Mitschek said he was confident the original pipeline proposal
could still work.
Conn said on Friday that BP and Azeri state oil group Socar
were now considering only a smaller pipeline from the Nabucco
consortium, which also includes Germany's RWE and
Hungary's MOL Group, known as 'Nabucco West".
This would have capacity of 16 bcm/year and rather than run
from twin spurs in eastern and southern Turkey to Austria, only
run 1,600 km from the Turkey-Bulgaria border to Austria.
A Nabucco spokesman said the focus is now on Nabucco West
but if BP and partners changed their position, the Nabucco
consortium, would revert to the original plan.
BP and Shah Deniz partners Socar and Norway's Statoil
could build their own pipeline, known as the South East
Europe Pipeline (SEEP), which would run from the Turkish border
to Hungary and mainly use existing gas infrastructure.
BP said it could also back a plan to ship gas along a
southern route, through Greece and Albania to Italy, via the
Trans-Adriatic-Pipeline (TAP), which is backed by Germany's E.ON
Ruhrgas and Switzerland's EGL.
Conn said the Shah Deniz partners expected to decide whether
or not to exclude the Nabucco West option by the end of June
and a final decision on the route by June 2013.
Nabucco's other shareholders are Turkey's Botas, BEH of
Bulgaria, and Romania's Transgaz.